European stocks climbed in light trade on Tuesday morning, halting a two-week slide, as data showing a sharp rise in German business sentiment overshadowed lingering concerns over the euro zone debt crisis.

Healthcare stocks slipped after AstraZeneca unveiled a charge related to trouble in its drug pipeline.

Shares in the drugmaker dropped 2.5 percent after it said cancer drug olaparib would not progress into final Phase III testing, while experimental antidepressant TC-5214 failed to meet its goal in a second Phase III study.

Rivals also lost ground, with GlaxoSmithKline down 1.2 percent and Novartis down 0.6 percent.

At 9:56 a.m. (British time), the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.5 percent at 962.14 points in choppy trade following a 4.3 percent slide over the past two weeks.

The euro zone's blue chip Euro STOXX 50 <.STOXX50E> index was up 0.8 percent at 2,221.36 points, following a near 9 percent drop in two weeks.

Data showed German business sentiment rose sharply in December, defying expectations for a decline and underscoring the strength of Europe's biggest economy.

The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 companies, rose to 107.2 in December from 106.6 in November.

After a rough patch with a long list of data showing weaker economic numbers, there is now a silver lining ... It looks like Germany will be able to avoid slipping into recession, LBBW economist Jens-Oliver Niklasch said.

But that should be taken with a grain of caution. It would take another increase next month to show a upwards turnaround in the economy's dynamic.

European stocks had slipped in early trade, as investors fretted about comments made late on Monday by European Central Bank President Mario Draghi, who poured cold water on hopes for more aggressive bond purchases.

Draghi said bond market pressure on the euro zone would be very significant in the first quarter of next year, but gave no hint the central bank was about to change tack on its bond-buying programme, sending the euro currency flirting with an 11-month low hit last week.

Despite attractive equity valuation levels, investors have been reluctant to buy stocks ahead of crucial tests in the bond market in first quarter of 2012. According to the ECB, some 230 billion euros of bank bonds and 250 to 300 billion (210 billion pounds to 252 billion pounds) in government bonds are falling due during the quarter.

The pressure that bond markets will be experiencing is really very, very significant if not unprecedented, Draghi said in a testimony to the European Parliament, adding that banks also had other problems, including lack of capital.

His comments weighed on sentiment on Wall Street, where losses accelerated in late trade after Bank of America's stock price fell below $5 for the first time in nearly three years.

Around Europe on Tuesday, Britain's FTSE 100 index <.FTSE> was down 0.2 percent, Germany's DAX index <.GDAXI> up 0.6 percent, and France's CAC 40 <.FCHI> up 0.6 percent.

The STOXX euro zone bank index <.SX7E> is on track to record a loss of 40 percent for 2011, hurt by fears the euro zone sovereign debt crisis could to lead to massive defaults.

(Reporting by Blaise Robinson; additional reporting by Berlin office, Editing by Mark Potter)